News Column

FEI Reports First-Quarter Results

April 29, 2014

Bookings of $247.3 Million

Revenue of $226.3 Million and GAAP EPS of $0.59


HILLSBORO, Ore., April 29, 2014 (GLOBE NEWSWIRE) -- FEI Company (Nasdaq:FEIC) reported results for the first quarter of 2014. Revenue of $226.3 million was up 2% compared to $221.2 million in the first quarter of 2013 and a record for a first quarter. It was down 15% compared to $265.3 million in the fourth quarter of 2013. Diluted earnings per share computed on the basis of accounting principles generally accepted in the United States ("GAAP") were $0.59, compared with $0.65 in the first quarter of 2013 and $0.97 in the fourth quarter of 2013. Net income for the quarter was $25.1 million, compared with $26.8 million in the first quarter of 2013 and $41.3 million in the fourth quarter of 2013. Included in net income was a previously announced restructuring charge of $1.3 million, which reduced GAAP earnings per share by $0.02.

The gross margin in the first quarter was 47.0%, compared with 46.4% in the first quarter of 2013 and 47.0% the fourth quarter of 2013.

Bookings in the first quarter were $247.3 million, compared with bookings of $230.7 million in the first quarter of 2013 and $256.8 million in the fourth quarter of 2013. The book-to-bill ratio in the quarter was 1.09-to-1 and the backlog at the end of the quarter was $494.6 million.

"This was a difficult quarter," commented Don Kania, president and CEO. "While revenue was a record for a first quarter, it was below our expectations, and that affected our earnings. On the other hand, our gross margin held up despite the lower volume, and cash flow from operations was again strong. Bookings were around $250 million for the third quarter in a row, paced in this quarter by strength in semiconductor equipment and structural biology, and we built our backlog by $21 million to a record level. While we are disappointed with our revenue in the first quarter, we expect higher revenue and earnings in the second quarter."

Total cash, investments and restricted cash at the end of the quarter was $548.8 million, a decrease of $42.4 million from the end of the fourth quarter, and cash flow provided by operating activities was positive $28.4 million. As previously announced, FEI acquired Lithicon AS of Trondheim, Norway during the first quarter for $68 million in cash.

Outlook

For the second quarter of 2014, revenue is expected to be in the range of $230 million to $240 million, and bookings are expected to be around $250 million. GAAP earnings per share are expected to be in the range of $0.65 to $0.75. The effective tax rate is expected to be approximately 19%.

Revenue for the full year 2014 is now expected to be 8% to 10% greater than 2013 revenue.

Investor Conference Call -- 2:00 p.m. Pacific time, Tuesday, April 29, 2014

Parties interested in listening to FEI's quarterly conference call may do so by dialing 1-877-941-8631 (U.S., toll-free) or 1-480-629-9644 (international and toll), with the conference title: FEI First Quarter Earnings Call, Conference ID 4679947. A telephone replay of the call will be available at 1-800-406-7325 (U.S., toll-free) or 1-303-590-3030 (international and toll) with the passcode: 4679947#. The call can also be accessed via the web by going to FEI's Investor Relations page at www.fei.com, where the webcast will also be archived.

Safe Harbor Statement

This news release contains forward-looking statements that include guidance for revenue, earnings per share and bookings for the second quarter of 2014, revenue expectations for the full year 2014 and assumptions about tax rates. Forward-looking statements may also be identified by words and phrases that refer to future expectations, such as "guidance", "guiding", "forecast", "toward", "plan", "expect", "expects", "are expected", "is expected", "will", "projecting", "look forward" and other similar words and phrases. Factors that could affect these forward-looking statements include, but are not limited to, the global economic environment; lower than expected customer orders and potential weakness of the Science and Industry market segments; lower than expected customer orders for recently-introduced new products; potential disruption in manufacturing or unexpected additional costs due to the transition from older to newer products; potential reduced governmental spending due to budget constraints and uncertainty around U.S. or other countries' sovereign debt; potential disruption in the company's operations due to organization changes; risks associated with building and shipping a high percentage of the company's quarterly revenue in the last month of the quarter; cyclical changes in the data storage and semiconductor industries, which are the major components of Industry market segment revenue; continued weakness in the mining industry, which is also a component of Industry market segment revenue; limitations in our manufacturing capacity for certain products; problems in obtaining necessary product components in sufficient volumes on a timely basis from our supply chain; the relative mix of higher-margin and lower-margin products; risks associated with a high percentage of the company's revenue coming from "turns" business, when the order for a product is placed by the customer in the same quarter as the planned shipment; delays in government funding to support expected orders; delays in meeting all accounting requirements for revenue recognition, especially for new products; fluctuations in foreign exchange rates, which can affect margins or the competitive pricing of our products; additional costs related to future merger and acquisition activity; failure of the company to achieve anticipated benefits of acquisitions and collaborations, including failure to achieve financial goals and integrate acquisitions successfully; reduced profitability due to failure to achieve or sustain margin improvement in service or product manufacturing; failure to achieve improved operational efficiency and other benefits from infrastructure investments; potential customer requests to defer planned shipments; increased competition and new product offerings from competitors; lower average sales prices and reduced margins on some product sales due to increased competition; failure of the company's products and technology, including new products, to find acceptance with customers; inability to deploy products as expected or delays in shipping products due to technical problems or barriers, especially with regard to recently introduced TEM products; bankruptcy or insolvency of customers or suppliers; changes in tax rate and laws, accounting rules regarding taxes or agreements with tax authorities; the ongoing determination of the effectiveness of foreign exchange hedge transactions; potential shipment or supply chain disruptions due to natural disasters or terrorist attacks; changes to or potential additional restructurings and reorganizations; changes in trade policies and tariff regulations; changes in the regulatory environment in the nations where we do business; and additional selling, general and administrative or research and development expenses. Please also refer to our Form 10-K, Forms 10-Q, Forms 8-K and other filings with the U.S. Securities and Exchange Commission for additional information on these factors and other factors that could cause actual results to differ materially from the forward-looking statements. FEI assumes no duty to update forward-looking statements.

About FEI

FEI Company (Nasdaq:FEIC) designs, manufactures and supports a broad range of high-performance microscopy workflow solutions that provide images and answers at the micro-, nano- and picometer scales. Its innovation and leadership enable customers in industry and science to increase productivity and make breakthrough discoveries. Headquartered in Hillsboro, Ore., USA, FEI has over 2,600 employees and sales and service operations in more than 50 countries around the world. More information can be found at: www.fei.com.

 
 
FEI Company and Subsidiaries

Consolidated Balance Sheets

(In thousands)

(Unaudited)
       
       
 March 30,

2014
December 31,

2013
March 31,

2013
ASSETS      
CURRENT ASSETS:      
Cash and cash equivalents$ 317,666$ 384,170$ 271,675
Short-term investments in marketable securities 120,832 108,191 97,590
Short-term restricted cash 14,926 18,798 14,257
Receivables, net 206,906 194,418 215,833
Inventories, net 192,551 181,725 185,254
Deferred tax assets 9,884 15,114 11,760
Other current assets 30,089 28,324 31,004
Total current assets 892,854 930,740 827,373
Non-current investments in marketable securities 60,740 47,278 28,190
Long-term restricted cash 34,589 32,718 29,936
Non-current inventories 59,295 62,104 63,564
Property plant and equipment, net 163,447 157,829 103,743
Intangible assets, net 67,637 47,197 48,806
Goodwill 184,260 136,152 128,172
Deferred tax assets 4,261 1,751 829
Other assets, net 10,517 10,315 8,891
TOTAL$ 1,477,600$ 1,426,084$ 1,239,504
LIABILITIES AND SHAREHOLDERS' EQUITY      
CURRENT LIABILITIES:      
Accounts payable$ 94,311$ 73,247$ 55,390
Accrued liabilities 47,802 57,851 50,275
Deferred revenue 93,098 91,563 83,699
Income taxes payable 3,135 4,579 1,952
Convertible debt 89,010
Other current liabilities 52,105 46,374 39,323
Total current liabilities 290,451 273,614 319,649
Other liabilities 80,648 74,902 67,107
SHAREHOLDERS' EQUITY:      
Preferred stock - 500 shares authorized; none issued and outstanding
Common stock - 70,000 shares authorized; 42,255, 42,136 and 38,567 shares issued and outstanding at March 30, 2014, December 31, 2013 and March 31, 2013 646,531 637,482 523,387
Retained earnings 412,938 392,958 308,130
Accumulated other comprehensive income 47,032 47,128 21,231
Total shareholders' equity 1,106,501 1,077,568 852,748
TOTAL$ 1,477,600$ 1,426,084$ 1,239,504
 
 
 
FEI Company and Subsidiaries

Consolidated Statements of Operations

(In thousands, except per share amounts)

(Unaudited)
       
       
 Thirteen Weeks Ended
 March 30,

 2014
December 31,

 2013
March 31,

 2013
NET SALES:      
Products$ 169,298$ 207,154$ 169,495
Service 56,966 58,137 51,694
Total net sales 226,264 265,291 221,189
COST OF SALES:      
Products 86,595 104,873 85,183
Service 33,345 35,826 33,455
Total cost of sales 119,940 140,699 118,638
Gross margin 106,324 124,592 102,551
OPERATING EXPENSES:      
Research and development 25,646 26,328 24,809
Selling, general and administrative 48,462 48,051 43,524
Restructuring, reorganization and relocation 1,331 695
Total operating expenses 75,439 74,379 69,028
OPERATING INCOME 30,885 50,213 33,523
OTHER EXPENSE, NET (270) (968) (1,505)
INCOME BEFORE TAXES 30,615 49,245 32,018
INCOME TAX EXPENSE 5,537 7,972 5,217
NET INCOME$ 25,078$ 41,273$ 26,801
BASIC NET INCOME PER SHARE DATA$ 0.59$ 0.98$ 0.70
DILUTED NET INCOME PER SHARE DATA$ 0.59$ 0.97$ 0.65
WEIGHTED AVERAGE SHARES OUTSTANDING:      
Basic 42,191 41,963 38,522
Diluted 42,772 42,591 42,136
 
 
 
FEI Company and Subsidiaries

Consolidated Statements of Operations

(Unaudited)
       
       
 Thirteen Weeks Ended (1)
 March 30,

 2014
December 31,

 2013
March 31,

 2013
NET SALES:      
Products 74.8% 78.1% 76.6%
Service 25.2 21.9 23.4
Total net sales 100.0% 100.0% 100.0%
COST OF SALES:      
Products 38.3% 39.5% 38.5%
Service 14.7 13.5 15.1
Total cost of sales 53.0% 53.0% 53.6%
GROSS MARGIN:      
Products 48.9% 49.4% 49.7%
Service 41.5 38.4 35.3
Gross margin 47.0 47.0 46.4
OPERATING EXPENSES:      
Research and development 11.3% 9.9% 11.2%
Selling, general and administrative 21.4 18.1 19.7
Restructuring, reorganization and relocation 0.6 0.3
Total operating expenses 33.3% 28.0% 31.2%
OPERATING INCOME 13.6% 18.9% 15.2%
OTHER EXPENSE, NET (0.1)% (0.4)% (0.7)%
INCOME BEFORE TAXES 13.5% 18.6% 14.5%
INCOME TAX EXPENSE 2.4% 3.0% 2.4%
NET INCOME 11.1% 15.6% 12.1%
       
(1)       Percentages may not add due to rounding.

 

 

 
FEI Company and Subsidiaries

Consolidated Summary of Cash Flows

(In thousands)

(Unaudited)

 
       
       
 Thirteen Weeks Ended
 March 30,

 2014
December 31,

 2013
March 31,

 2013
Net Income 25,078 41,273 26,801
Depreciation 7,066 6,251 5,810
Amortization 3,197 2,700 2,557
Stock-based compensation 5,139 5,011 4,364
Other changes in working capital (12,031) 42,469 (4,722)
Net cash provided by operating activities 28,449 97,704 34,810
       
Acquisition of property, plant and equipment (4,336) (15,262) (5,043)
Payments for acquisitions, net of cash acquired (64,615)
Other investing activities (24,087) (33,233) (20,440)
Net cash used in investing activities (93,038) (48,495) (25,483)
       
Net cash provided (used) by financing activities 1,357 (1,417) 1,291
       
Effect of exchange rate changes (3,272) 876 (5,245)
       
(Decrease) increase in cash and cash equivalents (66,504) 48,668 5,373
       
Supplemental Cash Flow Information:      
Cash paid for income taxes 3,711 3,412 2,656
Accrued purchases of plant and equipment 8,345 1,014 398
 
 
 
FEI Company and Subsidiaries

Supplemental Data Table

($ in millions, except per share amounts)

(Unaudited)
       
       
 Q1 Ended 

March 30, 2014
Q4 Ended

December 31, 2013
Q1 Ended 

March 31, 2013
Income Statement Highlights      
Consolidated sales$ 226.3$ 265.3$ 221.2
Gross margin 47.0% 47.0% 46.4%
Net income$ 25.1$ 41.3$ 26.8
Diluted net income per share$ 0.59$ 0.97$ 0.65
Sales and Bookings Highlights      
Sales by Segment      
Industry Group$ 106.5$ 121.3$ 99.1
Science Group 119.8 144.0 122.1
Sales by Geography      
USA & Canada$ 72.3$ 65.5$ 68.7
Europe 67.0 71.6 65.7
Asia-Pacific and Rest of World 87.0 128.2 86.8
Gross Margin by Segment      
Industry Group 52.7% 51.2% 51.0%
Science Group 41.9 43.4 42.6
Bookings and Backlog      
Bookings - Total$ 247.3$ 256.8$ 230.7
Book-to-bill Ratio 1.09 0.97 1.04
Backlog - Total$ 494.6$ 473.5$ 434.2
Backlog - Service 133.0 124.2 102.0
Bookings by Segment      
Industry Group$ 123.2$ 114.7$ 104.5
Science Group 124.1 142.1 126.2
Bookings by Geography      
USA & Canada$ 58.1$ 78.5$ 55.5
Europe 92.7 76.8 64.0
Asia-Pacific and Rest of World 96.5 101.5 111.2
Balance Sheet and Other Highlights      
Cash, equivalents, investments, restricted cash$ 548.8$ 591.2$ 441.6
Days sales outstanding (DSO) 83 67 89
Days in inventory 189 163 195
Days in payables (DPO) 72 48 43
Cash Cycle (DSO + Days in Inv - DPO) 200 182 241
Working capital$ 602.4$ 657.1$ 507.7
Headcount (permanent and temporary) 2,636 2,611 2,576
Euro average rate 1.37 1.36 1.32
Euro ending rate 1.37 1.38 1.28
Yen average rate 102.74 99.99 91.78
Yen ending rate 102.33 105.16 94.16

CONTACT: FEI CompanyFletcher Chamberlin Investor Relations & Communications Director (503) 726-7710 fletcher.chamberlin@fei.com



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Source: FEI Company


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